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pre-seed (funding round)

In the venture capital world, Pre-Seed is the earliest formal stage of startup funding. It is the "ignition" capital—the money you raise to prove that your idea has legs before you are ready for institutional Seed funding.

Historically, this stage didn’t exist as a formal category; founders used their own savings or credit cards. Today, however, it is a distinct asset class with dedicated funds and specific expectations.

Here is the breakdown of what Pre-Seed really means from an investor's perspective:


The Core Objective: "Problem-Solution Fit"

At the Pre-Seed stage, you are not yet proving that the market wants your product (Product-Market Fit). You are proving that a meaningful problem exists and that your team is capable of building a solution for it.
The capital is typically used to:
  1. Hire the initial founding team (engineers, designers).
  2. Build a Minimum Viable Product (MVP).
  3. Run initial experiments to validate customer demand.

The Economics (Rough Benchmarks)

While outliers exist, here is what we typically see in the current market:
  1. Check Size: $50k – $750k total raised.
  2. Valuation (Cap): $2M – $8M (highly dependent on geography and sector).
  3. Instruments: Almost exclusively SAFEs (Simple Agreement for Future Equity) or Convertible Notes. Equity rounds are rare here due to legal costs.

3. The Investors

Who writes these checks?
  1. Friends & Family: The classic "believers" round.
  2. Angel Investors: High-net-worth individuals, often former operators.
  3. Pre-Seed Micro-VCs: Funds specifically designed to take high risks early (often $10M–$50M fund size).
  4. Accelerators: Programs like Y Combinator or Techstars.

4. What Investors Look For (The Risk Profile)

Since there is rarely data or revenue to analyze, I invest based on conviction in the team and the market.
  1. Team: Do you have "Founder-Market Fit"? Why are you the specific person to solve this? Do you have the technical ability to build the first version?
  2. Market Size: If this works, is the opportunity massive? (VCs need huge upside to offset the high failure rate at this stage).
  3. Velocity: How fast are you moving? Pre-seed investors love speed of execution.

Comparison: Pre-Seed vs. Seed

Feature

Pre-Seed

Seed

Primary Goal

Prove the solution can be built.

Prove the market wants it (Traction).

Product Status

Idea, Prototype, or Alpha.

Live Product / MVP with feedback.

Revenue

usually $0 or negligible.

Usually some MRR (e.g., $10k–$50k+).

Team

Founders + maybe 1-2 hires.

Founders + core functional team.

Failure Rate

Extremely High.

High.


Veteran VC Advice

If you are currently raising a Pre-Seed round, do not over-optimize for valuation. Your goal is to get the money in the bank as quickly as possible so you can get back to building. A high valuation at Pre-Seed can actually hurt you later if you cannot grow into it by the time you need Seed money.

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